Flathead County Commissioners Approve First Phase of Luxury Lakeside Golf Club Despite Water Right Concerns

Flathead County commissioners on Thursday approved the final plat for the first phase of the luxury “Territory 1889 Golf & Lake Club,” despite the absence of a secure water right that has presented liability concerns. The initial phase is slated to include 79 lots of the total 359 single-family homes planned on 1,700 acres in Lakeside.

In the 2-1 vote, commissioners Pam Holmquist and Brad Abell greenlit the project. However, Commissioner Randy Brodehl opposed the development, citing potential liability associated with an allocation agreement reached the day before with the Lakeside County Water and Sewer District (LCWSD) surrounding water rights.

Flathead Planning Director Erik Mack told commissioners the developer originally proposed using on-site wells as it works to obtain water rights from the Department of Natural Resources and Conservation (DNRC). The system would eventually be transferred to the LCWSD and would be closed, meaning other sewer systems would not connect to it.  

However, the new agreement allows the developer to take over the district’s existing water right for seven years as the developer works to complete phase one and potentially phase two of the project. But without a water right following the seven-year agreement, the developer would be required to build extension lines to connect to the rest of the system.

“The water right is in question right now,” Mack said.

None of this, however, is considered in the legally binding subdivision improvement agreement (SIA) because engineers have not certified the updated estimates that include the extension line.

“We don’t know the cost of what it would be to build that extension line because if they don’t get water rights, then that’s the route they have to go and we don’t want to be responsible for paying for connection if something were to happen in the future, so we wouldn’t want that to be part of the SIA,” Mack said.

If water rights are not obtained after seven years, the developer would be responsible for the extension line’s cost, according to the agreement. But since the extension line infrastructure is not listed in the SIA, it could also potentially leave Flathead County liable, according to Deputy Flathead County Attorney Elsbeth Cooper.

“It is a possibility that it could go that way, and it would leave the county on the hook for this and that is my concern,” Cooper said.  

But engineers described the agreement as a backup plan as efforts to obtain a water permit from the DNRC continue, a process that has been halted after a judge ordered a preliminary injunction earlier this year.

“The agreement reached yesterday for water rights through the district is essentially a backup plan to give confidence that there is a route to water rights for the project eventually,” Craig Schaeffer of 406 Engineering said. “But the plan on the table is to use the wells on-site”

Bill Van Canagan, the developer’s Bozeman-based attorney, said that agreement serves as a contingency plan and the project’s final plat conditions have been met.

“There’s no requirement in these conditions that a secure water right be obtained,” Van Canagan said.

Despite the legal uncertainty, commissioners Holmquist and Abell approved the proposal.

“I’m not a lawyer by any means, but I believe there is a way to push that back onto that agency,” Holmquist said. “They said they would do something, and they better do it, or the onus is on them, not on the county.”

“So I’m ready to move forward and see what happens,” she added.

But assurances from the developer’s attorneys and engineers were not enough to sway Brodehl, who supports the project but said it was not ready for “prime time.”

“I like the idea of the potential for them to hook into the wastewater treatment plant and a water supply – I like it a lot,” Brodehl said. “I have some concerns that while we may have some sort of an agreement in place, we don’t know what that agreement is going to look like, and we don’t know what the costs are that should have been included in the SIA that have not.”

The final plat was approved after commissioners tabled the development twice since September after Mack requested its delay citing concerns that conditions related to the Lakeside County Water and Sewer District had not been met.  

The district last year applied for a water permit from the DNRC, but the process stalled after a judge halted the application in June. The permit would divert 81 million gallons of groundwater a year to the development.

According to the staff report, the first phase of the project includes 79 residential lots and 11 open space lots, all of which the district would serve.

Proposed by Discovery Land Company, the development will also include restaurants, a clubhouse, a spa, fitness areas, offices, retail stores and other facilities, along with 864 acres of open space. A 36-slip marina is included for Territory 1889 members, but the dock’s construction has been temporarily stalled after a judge ruled it did not comply with the Montana Lakeshore Protection Act. The marina is not part of the final plat application.

The company operates clubs around the world, including Montana properties at Crazy Mountain Ranch in Shields Valley, Iron Horse Golf Club in Whitefish and the Yellowstone Club in Big Sky.

The Oct. 30 commissioners’ meeting drew a standing-room-only crowd of the project’s supporters and opponents. Several Lakeside residents and conservationists have argued since the project’s introduction that the club could cause a variety of negative impacts, including wildlife habitat loss, traffic congestion, gentrification and water quality degradation.

Citizens for a Better Flathead Director Mayre Flowers argued the developers have not met legal requirements related to the water and sewer district.

“What is really of concern is the way this decision yesterday with the Lakeside Sewer and Water Board was pushed through with almost no notice and with that board failing to provide the public evidence of independent appraisals, engineer valuations, board memos, or financial studies evaluating the fair market value of the permanent water right,” Flowers said.

Proponents in commissioners’ chambers, who included contractors, real estate brokers and Flathead County residents, argued Territory 1889 will bring jobs, increased school tax revenue and road upgrades.

“Discovery is a great developer,” said Kyle Schellinger of Schellinger Construction. “They’re about Montana. When I’ve submitted subcontract bids to them, they haven’t necessarily picked the lowest one. They’ve picked the ones that are local. They want to support this valley. They want to support Montana, and they want it to be a great place for everybody to come and live.”

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